Accuray Incorporated Reports Second Quarter Fiscal 2007 Financial Results

March 15, 2007 at 4:12 PM EDT

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SUNNYVALE, Calif., March 15, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Accuray Incorporated (Nasdaq: ARAY), a global leader in the field of robotic radiosurgery, today announced financial results for the second quarter ended December 30, 2006. Total net revenues were $26.3 million for the quarter ended December 30, 2006, as compared to $11.3 million for the quarter ended December 31, 2005, an increase of 133 percent. The net loss for the second quarter was $7.3 million, or $0.45 per share, compared to a net loss of $7.9 million, or $0.50 per share, for the same quarter in 2005. The fiscal 2007 second quarter results are consistent with the ranges for revenue and net loss included in the Registration Statement on Form S-1 (Reg. No. 333-138622) filed with the U.S. Securities and Exchange Commission in connection with our initial public offering in February.

For the six months ended December 30, 2006, total net revenues were $59.1 million, compared to $15.2 million for the same period in 2005, an increase of 289 percent. The net loss for the six months ended December 30, 2006 was $5.3 million, or $0.33 per share, compared to a net loss of $18.1 million, or $1.14 per share for the same period in 2005.

The Company reported that its losses included stock option expenses of $2.9 million and $2.3 million for the quarters ending December 30, 2006 and December 31, 2005, respectively, and $5.1 million and $4.2 million for the first six months ending December 30, 2006 and December 31, 2005, respectively.

"We are pleased with Accuray's strong growth in both U.S. and international markets," said Euan S. Thomson, Ph.D., president and chief executive officer of Accuray. "Our CyberKnife(R) Robotic Radiosurgery System is an established leader in treating tumors with radiosurgery anywhere in the body, including the spine, lung, liver, prostate and pancreas, which is driving continued demand and adoption."

As of December 30, 2006, 91 CyberKnife systems had been installed at customer sites, up from 83 at the end of the first quarter. This includes 80 systems sold directly to customers and 11 placed under shared ownership agreements. Of the 91 systems installed, 58 are in the United States, 24 in Asia and 9 in Europe. Reported backlog at the end of the quarter ended December 30, 2006 was approximately $328 million, compared to approximately $330 million at the end of the quarter ended September 30, 2006. Reported backlog includes only contracts which contain no contingencies, or for which all contingencies have been met and does not include signed contracts that have contingencies such as the receipt of certain approvals, financing dependencies, or the formation of certain legal structures. The number of signed contracts with contingencies continued to increase in the quarter ended December 30, 2006. These contingent contracts will be added to backlog once all contingencies have been met.

Accuray completed its initial public offering on February 13, 2007. In the initial public offering, Accuray and certain selling stockholders sold approximately 18.4 million shares at a price of $18 per share. Net proceeds to Accuray after exercise of the underwriters' over-allotment and expenses were approximately $170.5 million and there were approximately 53.3 million shares outstanding after completion of the offering.

About Accuray

Accuray Incorporated, based in Sunnyvale, Calif., is a global leader in the field of robotic radiosurgery. Its CyberKnife System is the world's first and only commercially available intelligent robotic radiosurgery system designed to treat tumors anywhere in the body, typically with sub-millimeter accuracy. To date, it is estimated that the CyberKnife System has been used by physicians to treat more than 20,000 patients worldwide. For more information, please visit www.accuray.com.

Forward-Looking Statement

Except for the historical information contained herein, the matters set forth in this press release, including statements as to financial guidance, development, clinical studies, regulatory review and approval, and commercialization of products, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date the statements are made and are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events. You should not put undue reliance on any forward- looking statements. Important factors that could cause actual performance and results to differ materially from the forward-looking statements we make include: reimbursement for the CyberKnife procedure; government approvals of our products; market acceptance of products; funding requirements; intellectual property protection for our products; competing products; and other risks detailed from time to time under the heading "Risk Factors" in Registration Statement on Form S-1 (Reg. No. 333-138622), as may be updated from time to time by our other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize, or if any underlying assumptions prove incorrect, our actual performance or results may vary materially from any future performance or results expressed or implied by these forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual performance or results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws.

NOTE: Accuray, the Accuray logo, CyberKnife, Synchrony, Xsight, Xchange and RoboCouch are among trademarks and/or registered trademarks of Accuray Incorporated in the United States and other countries.


                             Accuray Incorporated
        Unaudited Condensed Consolidated Statements of Operations (1)
                      (in thousands, except per share data)

                             Three months ended        Six months ended
                           Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,
                             2006         2005        2006          2005

    Net revenue:
     Products              $19,309       $7,621      $46,076       $8,089
     Shared ownership
      programs               2,585        2,031        4,811        3,715
     Services                3,661          932        6,630        1,929
     Other                     792          742        1,601        1,464
     Total net revenue      26,347       11,326       59,118       15,197
    Cost of revenue:
     Costs of products       7,363        2,809       18,080        3,237
     Costs of shared
      ownership programs       696          699        1,302        1,232
     Costs of services       2,960          970        4,629        1,564
     Costs of other            626          488        1,102          960
     Total cost of revenue  11,645        4,966       25,113        6,993
     Gross profit           14,702        6,360       34,005        8,204
    Operating expenses:
     Selling and marketing   9,764        6,236       17,294       10,952
     Research and
      development            6,132        4,366       12,314        8,910
     General and
      administrative         6,136        3,605       10,755        6,387
     Total operating
      expenses              22,032       14,207       40,363       26,249
    Loss from operations    (7,330)      (7,847)      (6,358)     (18,045)
    Other income and
     (expense)                 103          (15)         310          (21)
    Loss before provision
     for income taxes and
     cumulative effect of
     change in accounting
     principle              (7,227)      (7,862)      (6,048)     (18,066)
    Provision for income
     taxes                      64           74          123           80

    Loss before cumulative
     effect of change in
     accounting principle   (7,291)      (7,936)      (6,171)     (18,146)
    Cumulative effect of
     change in accounting
     principle, net
     of tax of $0               --           --          838           --
    Net loss               $(7,291)     $(7,936)     $(5,333)    $(18,146)

    Net loss per
     common share:
      Basic and diluted     $(0.45)      $(0.50)      $(0.33)      $(1.14)

    Weighted average common
     shares outstanding used
     in computing net
     loss per share:
      Basic and diluted     16,209       15,942       16,234       15,881
    Cost of revenue,
     selling and marketing,
     research and
     development, and
     general and
     administrative
     expenses include
     stock-based
     compensation
     charges as follows:
      Cost of revenue         $232         $265         $450         $419
      Selling and marketing $1,007         $762       $1,656       $1,291
      Research and
       development            $471         $442         $920         $814
      General and
       administrative       $1,164         $847       $2,062       $1,691

    (1)  Accuray's second quarter ends on the Saturday nearest to December 31.
         For presentation purposes, the Unaudited Condensed Consolidated
         Statements of Operations refer to a calendar month end.


                               Accuray Incorporated
               Unaudited Condensed Consolidated Balance Sheets (1)
                       (in thousands, except share amounts)

                                                   December 31,     June 30,
                                                      2006            2006
                                                   (unaudited)
    Assets
    Current assets:
     Cash and cash equivalents                       $15,865        $27,857
     Accounts receivable, net of allowance
      for doubtful accounts of $20 at
      December 31, 2006 and June 30, 2006             18,841         11,698
     Inventories                                      14,940         10,100
     Prepaid expenses and other current assets         6,456          3,512
     Deferred cost of revenue-current                 10,106          4,810
       Total current assets                           66,208         57,977
    Property and equipment, net                       23,440         21,945
    Goodwill and intangible assets, net                5,812          5,941
    Deferred cost of revenue and
     other non-current assets                         48,263         52,760
       Total assets                                 $143,723       $138,623

    Liabilities, temporary equity and
     stockholders' equity (deficiency)
    Current liabilities:
     Accounts payable                                 $8,547         $4,726
     Accrued expenses                                 13,110         15,055
     Customer advances and deferred revenue -
      current                                         50,025         41,979
       Total current liabilities                      71,682         61,760
    Long-term liabilities:
     Customer advances and deferred revenue -
      non-current                                    126,654        130,214
       Total liabilities                             198,336        191,974

    Temporary equity
     Redeemable convertible preferred stock,
      no par value; authorized: 30,000,000 shares;
      issued and outstanding: 17,419,331 at
      December 31, 2006 and June 30, 2006;
      liquidation amount: $42,934 and
      $40,354 at December 31, 2006 and
      June 30, 2006, respectively.                    27,504         27,504

    Stockholders' equity (deficiency)

     Common stock, no par value; authorized:
      70,000,000 shares; issued and outstanding:
      16,206,327 and 16,243,150 shares at
      December 31, 2006 and June 30, 2006,
      respectively.                                   12,876         13,276
     Additional paid-in capital                       30,966         43,988
     Notes receivable from stockholders                   --           (206)
     Deferred stock-based compensation                    --        (17,272)
     Accumulated other comprehensive income               15             --
     Accumulated deficit                            (125,974)      (120,641)
       Total stockholders' equity (deficiency)       (82,117)       (80,855)

       Total liabilities, temporary equity and
        stockholders' equity (deficiency)           $143,723       $138,623

    (1) Accuray's second quarter ends on the Saturday nearest to December 31.
        For presentation purposes, the Unaudited Condensed Consolidated
        Balance Sheets refer to a calendar month end.

SOURCE Accuray Incorporated

investors, Robert McNamara, Senior Vice President and CFO, +1-408-789-4264, or investorrelations@accuray.com, or media, Stephanie Tomei, Public Relations Manager, +1-408-789-4234, or stomei@accuray.com, both of Accuray

http://www.accuray.com/